Housing crunch hits Wolseley
Industrial Distribution staff -- Industrial Distribution, 1/22/2008 6:39:00 AM
Wolseley plc posted a 2 percent sales increase during the five months ended Dec. 31, 2007, but revenues in North America fell roughly 10 percent and overall pre-tax profits were down nearly 33 percent.“We have acted decisively and rapidly in response to the challenging market conditions to take cost out of the group and will continue to do so. We remain committed to our strategy and are confident that with our size, scale, financial strength and operating efficiencies, we will emerge from this slowdown as a stronger group with an excellent platform for future growth,” CEO Chip Hornsby said.
The British building materials distributor, which ranked first on INDUSTRIAL DISTRIBUTION’s 2007 Big 50 list of distributors, said it completed cutting 3,000 jobs in its North American subsidiaries, a move it said would save about $122 million annually.
Wolseley added 10 bolt-on acquisitions during the period, spending roughly $345 million on the purchases, which are expected to add $444.6 million in annual revenues.
The company said it expects market conditions to worsen and indicated it would look to further cut costs and curtail its capital spending.
“Action will continue to be taken in the remainder of the current financial year to reduce the group’s cost base and to curtail capital expenditure,” the company said in a statement.
“In the U.S.A., the housing market is likely to deteriorate further until the current high levels of unsold inventory have declined and the full effects of problems in the sub-prime market have been assimilated. These conditions, together with reduced availability of credit, are expected to put further pressure on the [repairs, maintenance and improvement] market. The commercial and industrial market is expected to show modest growth for the majority of the current financial year given the longer lead times of many large projects within this sector. The group expects to continue to drive competitive advantage and increased market share from the distribution center network, customer focus and to exploit opportunities arising from the impact that weakening markets will have on competitor positions.”
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